DiGiacinto v. RB Health LLC

Background

Joseph DiGiacinto filed a proposed class action against RB Health (US) LLC concerning the labeling and marketing of Children’s Delsym Cough Relief. He alleged that RB Health markets a Delsym product for adults and a separate product for children. The children’s product has a cartoon image of a child, says “Ages 4+,” and says “For Children & Adults.” The adult product does not state on its front packaging that it is suitable for any age.

According to the first amended complaint, the products have the same active ingredient in the same amount and the same inactive ingredients. Their side labels contain identical dosing charts, and their back “Drug Facts” labels are identical. DiGiacinto alleged that the children’s product was presented as specially formulated for children and sold at a premium even though it was identical to the adult product. He alleged that he purchased the children’s product several times because he believed it was specially formulated for children and would not have bought it, or would have paid less, had he known the products were identical.

He asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act; claims for breach of express and implied warranties; negligent misrepresentation; intentional misrepresentation or fraud; and unjust enrichment, which the court treated as a quasi-contract claim seeking restitution. He sought to represent a nationwide class and a California subclass.

The Motion to Dismiss

RB Health moved under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) permits dismissal for lack of subject-matter jurisdiction, including lack of constitutional standing. Rule 12(b)(6) tests whether the complaint alleges enough facts to support a legally recognized and plausible claim. For the Rule 12(b)(6) issues, the court treated the complaint’s factual allegations as true and drew reasonable inferences in DiGiacinto’s favor.

Standing

RB Health argued that DiGiacinto lacked standing because any price difference between the products resulted from pricing decisions by retailers and distributors rather than RB Health. The court rejected that argument at the pleading stage. DiGiacinto alleged that RB Health made, labeled, and marketed the products; that the children’s packaging led consumers to believe it was specially formulated for children; and that he bought the product because of those representations. The court held that these allegations established a plausible, non-hypothetical chain of causation between RB Health’s alleged conduct and DiGiacinto’s claimed injury.

RB Health also argued that DiGiacinto could not seek injunctive relief because he now knew the products were pharmacologically identical. The court rejected that argument as well. DiGiacinto alleged that he would like to buy the children’s product again if its label were truthful but could not rely on the product’s front-label representations in the future. The court held that he adequately alleged a future injury because a consumer could not determine from the front label alone whether the alleged problem had been corrected; determining that would require comparing the ingredient labels of two products. The court also noted that reasonable consumers generally should not be expected to look past misleading front-label representations to find the truth in smaller-print ingredient information.

Consumer-Protection Claims

RB Health argued that the packaging could not mislead a reasonable consumer. The court disagreed. DiGiacinto alleged that the word “children,” the cartoon child, and the absence of an express disclosure that the products had the same active-ingredient concentration could lead reasonable consumers to believe that the children’s product was specially formulated for children.

The court distinguished cases involving products whose front labels expressly disclosed the relevant concentration or other information showing that the products had the same composition. Here, the concentration information appeared only on the back of the packaging. The court held that the first amended complaint plausibly alleged that the children’s packaging could mislead a reasonable consumer. The motion to dismiss the Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act claims was denied.

Warranty Claims

The court denied the motion to dismiss the express-warranty claim. DiGiacinto alleged that the children-specific language and image on the packaging conveyed that the product was specially formulated for children, and the court had already found those allegations sufficient under the reasonable-consumer standard.

The court also denied the motion to dismiss the implied-warranty claim. It explained that, under the theory pleaded, DiGiacinto did not need to allege that the product was unfit for use as cough medicine. His claim was based on the alleged failure of the product to conform to promises or factual statements on its label. Because the court found the express-warranty claim sufficiently pleaded, it found the implied-warranty claim sufficiently pleaded as well.

Misrepresentation and Fraud Claims

RB Health argued that the economic-loss rule barred the negligent-misrepresentation claim because DiGiacinto sought only monetary damages. The court acknowledged a split among district courts but relied on a Ninth Circuit decision stating that California treats negligent misrepresentation as a form of fraud for which economic loss may be recovered. The court therefore denied the motion to dismiss that claim.

The court also denied the motion to dismiss the intentional-misrepresentation and fraud claim. It had already found that the alleged packaging could mislead a reasonable consumer. It further held that the complaint adequately alleged that RB Health knew the packaging was false or misleading, intended to induce purchases at a premium price, and caused damage through consumers’ reliance.

Unjust Enrichment

The court explained that California does not recognize unjust enrichment as an independent cause of action, but a court may treat such a claim as a quasi-contract claim seeking restitution. DiGiacinto alleged that RB Health’s allegedly false and misleading labeling caused him and proposed class members to purchase the children’s product at a premium and that RB Health received an unjust benefit at their expense. The court held that these allegations were sufficient and denied the motion to dismiss the claim as construed.

Disposition

Judge Donna Ryu denied RB Health’s motion to dismiss the first amended complaint. The order did not resolve whether the allegations are ultimately true or establish liability. RB Health was ordered to file an answer by May 2, 2023.